There's no shortage of resources available telling you why college students should not have credit cards. Indeed there are some very valid concerns about college students and credit cards which are address later in this article, but there are also a number of good reason parents should help their children obtain a credit card heading off to college. This article covers some of these reasons.
They're going to get one anyways ? Recent studies have shown that as high as 92% of college student have at least one credit card by their sophomore year. Most of which just apply for an offer they receive in the mail without comparing their options By taking action early you can help them find the best credit card for them with lower rates and a more reasonable spending limit. This also provides you the opportunity to educate them on the risks of having a credit card.
Building a credit history ? Once your child is out of college they will need credit. Building a credit history while in college will give them a huge leg up when it comes time to apply for an auto loan or a mortgage. By using a credit card to build a good credit history they'll be more likely to be approved for these loans, get better rates, and hopefully won't need you to cosign for them.
Learn about credit before adulthood ? Unfortunately most public high schools really don't teach student about basic budgeting and financial planning they'll need as adults. A good portion of parents don't take the time to do this either. This results in most young adults today learning about credit the same way most of us did, the hard way. By allowing your child to have a credit card with a small credit line in college they can begin to learn these lessons in a more controlled environment, especially if you're a co-signer who has access to the account.
They teach budgeting ? Most college students would be hard pressed to tell you where their money goes. This is because when dealing with cash it's easy to forget what exactly you paid for each month. By using a credit card for expenses and paying off the bill each month it helps show your kids exactly where that money is going, the true cost of eating out and how to live within a budget.
To make online purchases ? A college student can save a fortune by purchasing text books online rather than on campus. The same is true about virtually every other item from clothing to furniture, electronics and music. This is the period in life where every penny counts for most people. You can not make purchases at most online stores without a credit card.
Emergencies ? Like it or not your child is most likely going to get themselves in a financial emergency at least once during college. Not only can having a credit card ensure they'll be able to eat, but can also come in handy in actual emergencies such as when a car breaks down or runs out of gas away from campus.
It's easier to qualify as a student ? It may seem odd, but it's actually harder to qualify for a credit card as a young adult out of college than while in college. Banks offer student credit cards specifically for college student that have lower qualification standards. Your child will need a credit card eventually and it will be much easier to get one now.
Motels and airlines require one ? If you child is going to school out of town, most likely they'll make the trip home once or twice. It's next to impossible to make hotel reservations or plane tickets without a credit card.
Addressing "The Concern"
There's really only one concern that parents have about their children having credit cards. ?They'll run up the bill, put themselves in debt and destroy their credit history.? This does happen in a number of cases, but as mentioned before they're much more likely to do this on their own than if you help them with the process. There are some things you can do to prevent or at least limit this.
Get a low credit limit ? This will give them what they need for emergencies, online purchases, motels and many of the other benefits listed above, but stop them from running up a large amount of debt. Even if the bank gives you a higher credit limit by default you can request it be lowered.
Co-sign for them ? While this option does make you personally responsible for any debt they run up, it also give you access to the account so you can monitor spending. It's important you take the time to review the bill and payments each month. Most banks will let you do this online now.
Get a prepaid credit card ? This doesn't provide the benefits of building a credit history but does provide most the other benefits. In addition you can replenish them online or by phone to provide an allowance, or allow others to do so as gifts.
Checking accounts with debit cards ? By getting a debit card tied to a checking account your child can have all the conveniences of a credit card without having to worry about getting into debt, or pay the annual fee that usually comes with a prepaid card. However, it does not help them build a credit history.
Student/college credit cards are credit cards specifically designed for young men and women attending college. Although student credit cards are also referred to as college credit cards, we will use the identifier, student credit card in this information release. Student credit card is the more popular name to describe credit cards for young men and women attending college. Student credit cards allow their users to understand the benefits of "real world" credit card usage prior to graduating college and taking on a full time occupation. Typically, for most college attendees, their student credit card is their first credit card and the door-opener to the world of credit card usage. Some students may have previously used supplementary credit cards, but those credit cards are connected to their father's or mother's credit card account. Still, it is true for those college students too, that their student credit card is the first credit card they can really call their own.
Student credit cards are essentially the same as other credit cards. They are used in the same way as other credit cards are. Some differences come into play for student credit card users, simply because they have no prior experience using credit cards and more than likely don't understand credit cards, conceptually. Therefore, credit card issuers are at risk when approving student credit cards for young persons who have little or no credit or credit card usage history. The inexperience of the student credit card user, in managing their finances competently, puts the student credit card issuer at risk of receiving the monthly credit card bill payments on time and/or receiving the payments at all. To insure themselves from student credit card dissemination risks, the issuer of student credit cards usually requires a parent of the student to co-sign the student credit card application. Also, the credit limit allocated to student credit cards is lower than it is for credit cards issued to working adults. Still, the assigned credit limit is, most often, sufficient to fulfill the college student's needs. Another method credit card issuers use to dissuade college students from overspending is to assign a higher interest rate to the student card.
If we are to peruse those seeming, previously mentioned, impositions in a positive manner, we would find that the same impositions are actually advantageous to the student, who is still learning to manage real world credit card usage. Most often those impositions will help the student credit card user in gaining good credit history. Good credit history will be important to the student at a later date in his or her life, when they want to procure more credit cards or loans.
Student credit cards are a very significant way to firmly establish good credit. They are money management tools which most college student should consider acquiring.
Both Debbie Dragon & Angelknight are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Debbie Dragon has sinced written about articles on various topics from Finances, Credit Cards and Kitchen Home Improvement. This article is courtesy of CreditorWeb.com, where you can compare offers and. Debbie Dragon's top article generates over 165000 views. to your Favourites.
Angelknight has sinced written about articles on various topics from Credit Cards, American Express Card and Business Credit Cards. Art Taylor has been a successful internet marketer for 10 years. He writes articles about credit cards and other topics. For more information or to apply for credit cards visit his websites at:. Angelknight's top article generates over 9900 views. to your Favourites.